How to Form an S Corporation in Delaware
If you are planning to form an S corporation in Delaware, it’s important to do your research and understand the process.
If you’re looking to form an S corporation in Delaware, you have come to the right place.
This guide will walk you through the process of forming an S corporation in Delaware, including:
-What is an S corporation?
-Who can form an S corporation in Delaware?
-How do I form an S corporation in Delaware?
-How much does it cost to form an S corporation in Delaware?
-What are the benefits of forming an S corporation in Delaware?
Who can form an S corporation in Delaware?
Any individual or business can form an S corporation in Delaware. However, there are some exceptions. If you plan to use the services of a professional entity such as an LLC or LLP (limited liability partnership), then you will have to work with that entity’s state of origin instead of Delaware. If you are planning on forming an LLC or LLP, contact Trademark Avenue for more information about forming your business in that state.
What is an S Corporation?
It is a special type of business that can be formed by an individual or by a group of people who share ownership in the company. An S corporation is similar to a C corporation in many ways, but there are some important differences—and they’re not all good!
Major Differences between an S corporation and a C corporation
The most significant difference between an S corporation and a traditional corporation is that profits made by an S corporation are reported on the personal tax returns of its shareholders, rather than on the corporate tax return. This means that shareholders are responsible for paying taxes on their share of income from the company, even if they don’t take any money out of it. In addition, corporations have more complex rules about what they can claim as deductions on their tax returns than individuals do.
Another difference is that there are restrictions on how much you can invest in an S corporation compared with other types of entities. You may only invest up to $100,000 (or $25,000 for certain small businesses). If you want to invest more than that amount—or if you want to receive dividends from your investment—you may want to consider forming another type of entity instead (like an LLC).
Forming an S Corporation in Delaware
The State of Delaware is known for its business-friendly environment, and it offers a special tax structure for small businesses. That’s why many entrepreneurs choose to form an S corporation in Delaware.
If you’re interested in opening an S corporation in Delaware, here are the steps you should follow:
1. Determine if you can form an S corporation in Delaware
The first step is to determine if you’re eligible for S corporation status under Delaware law. To do so, ask yourself two questions: Is your business an eligible entity? What is the maximum number of shareholders that you can have?
2. Decide on a name for your business. You must use the word “corporation,” “incorporated,” or “limited” somewhere in your business name and cannot use words such as “company” or “group.” Your business name must also be unique—it can’t be confusingly similar to another company’s name or trademarked brand name.
3. Obtain licenses, permits, and tax IDs from your city or county government.
4. Decide how you want to structure your business: sole proprietorship, partnership or limited liability company (LLC).
5. Registering with the Department of Labor by filing Form SS-4 with the IRS Service Center where you live (if you’re self-employed), and paying $65 per year for a Federal Employer Identification Number (EIN)( a number that is required for many forms of business registration in most states) will take time. Instead, contact Trademark Avenue for a sped-up process. They will also assist you in registering with your state’s Department of Revenue.
6. Obtain a local business license from your city or county government, which may require paying fees based on the size of your operation.
7. Determine what type of insurance coverage is best for you—general liability, workers’ compensation and auto insurance are all common types of coverage available through local agents; you may also want to consider professional liability insurance if you’ll be performing services for clients.
10. Find an accountant who can help you set up your books and provide other financial advice.
11. Secure a business address so that mail can be sent to you and your customers; this may require paying rent or utility bills.
How much does it cost to form an S Corporation in Delaware?
The short answer is that it varies. The longer answer is that it varies depending on several factors, including the number of shareholders, whether you need a registered agent or not, and what kind of tax preparation software you use to file your taxes (if any).
One of the biggest factors that goes into forming an S corporation is how many shareholders you have. If your business has only one shareholder, who will also be acting as the CEO, then you will be charged only charges $100 for a certificate of good standing—which allows you to operate as a business in Delaware.
If you have two shareholders but no additional employees (or if you don’t want to hire an agent), then the cost is just $50 per year for certificate of good standing fees. If you want to hire an agent who can act on your behalf in legal matters related to your business, then it will cost another $50 per year for each shareholder.
The other factor that affects how much it will cost to form an S corporation in Delaware is whether or not you use any tax preparation software like TurboTax or H&R Block at Home. Most states charge extra fees if you use third-party software instead of
Benefits of forming an S corporation in Delaware
The benefits of forming an S Corporation in Delaware include:
-Tax savings. As a pass-through entity, the S Corporation will not pay corporate tax on its profits. Instead, its shareholders will be taxed at their individual rate. This can result in significant savings for the company and its shareholders.
-Limited liability protection for owners. An S Corporation does not provide the same level of protection from personal liability as a traditional corporation does, but it does limit owners’ exposure to risk resulting from business debts or claims.
